Mahatma Education Society’s

Pillai College of Arts,Commerce and Science

(Autonomous)
New Panvel
ISO 9001:2015 certified
Affiliated to University of Mumbai

PROJECT REPORT
ON THE TOPIC
“VODAFONE –IDEA CELLULAR LTD MERGER (SCHEME
OF AMALGAMATION)”
SUBMITTED BY-
ABIZER ZUZER KACHWALA
ROLL NO- 8421
TYBAF-A

TO-
PROF.SHARAVATHI JAYARAJAN
AS A PART OF CONTINUOUS ASSESMENT –II FOR THE
SUBJECT –
FINANCIAL ACCOUNTING -V
(SEM-V)
A.Y-2020-21

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 INDEX
SR.NO NAME OF THE TOPIC PAGE NO

1 Introduction to 3-5
Amalgamation

2 Introduction Vodafone 6
idea companies

3 AMALGAMATION 7-9
SCHEME

4 FINANCIAL 9-12
RATIOS,SHAREHOLDIN
G PATTERN AND KEY
POINTS
5 FINANCIAL 13-18
INFORMATION AND
ANALYSIS –Balance
sheet of idea ltd prior
to amalgamation and
post Vodafone idea
balance sheet dated
31.3.19
6 CONCLUSION AND 19-20
REFERENCES

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 INTRODUCTION TO AMALGAMATION
Amalgamation means combination or merger. In amalgamation two
companies come together to secure various advantages such as
economies of large scale production, avoiding competition, increasing
efficiency, expansion and so on.

Companies may combine in the following ways:

1.Amalgamation: In amalgamation, a new company is formed to take
over the business of two or more old companies.

ABC DEF XYZ

LTD LTD LTD

Vendor Companies Purchasing Company

2.Absorption: In absorption, an existing company takes over the

business of another existing company.
Example-If the business of ABC ltd is taken over by an existing
company PQR ltd, it is called absorption.

PQR LTD
ABC TLD PQR LTD (PURCHASING
COMPANY)

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3.External reconstruction: In external reconstruction, a new company
is formed to take over the business of an existing company (loss
making, sick company).
Example: If business of loss making company ABC ltd is taken over
by a new company ABC (NEW)ltd, it is called external
reconstruction.
ABC ltd (OLD) is vendor company whereas ABC ltd(NEW) is a
purchasing company.

DISTINCTION-
Type Vendor Company Purchasing Company
Amalgamation Two or more existing New Company
companies

Two or more One formation

liquidations
Absorption One or more existing An existing Company
companies

One or more No formation

liquidations

External One and only one New Company

Reconstruction existing(loss-making)
company.

One Liquidation One formation

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 Accounting Standard -14

 AS-14 for amalgamation) is prescribed by Institute of Chartered

Accountants of India (ICAI).
 Amalgamation means an amalgamation pursuant to the
provisions of the Companies Act 2013, or any other statute
which may be applicable to companies and includes ‘Merger’.
Amalgamation involves acquisition of one company by the
other, after which, acquired company is dissolved and ceases to
exist.

 Amalgamation is of two types-

Amalgamation

MERGER PURCHASE

1.Merger- Here both the acquiring and acquired companies’ merger

and become a single company. The shareholders of the acquired
company become shareholders in the acquiring company
2.Purchase- Here one company acquires another company, and the
shareholders of the acquired company do not become the shareholders
in the acquiring company.

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 IDEA CELLULAR –VODAFONE INDIA AMALGAMATION
IN THE FORM OF MERGER

 Vodafone India Limited-

Vodafone Group is one of the world’s largest
telecommunications companies and provides a range of services
including voice, messaging, data and fixed communications.
Vodafone Group has mobile operations in 25 countries, partners
with mobile networks in 46 more, and fixed broadband
operations in 18 markets. As of 30 June 2018, Vodafone Group
had 534.5 million mobile customers and 19.9 million fixed
broadband customers, including India and all of the customers in
Vodafone’s joint ventures and associates

 Aditya Birla Group –IDEA-

A US $44.3 billion corporation, the Aditya Birla Group is in the
League of Fortune 500 companies. Anchored by an
extraordinary force of over 120,000 employees, belonging to 42
nationalities. Aon Hewitt, a reputed global consulting firm, in
the ‘Best Employers 2018’ study conducted by them, have
named Aditya Birla Group as the ‘Best Employer’ in India. In
the last 20 years, the Group has grown 20 times marking major
milestones

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 COMPOSITION SCHEME OF AMALGAMATION AND
ARRANGEMENT

AMONG

VODAFONE MOBILE TRANSFEROR COMPANY 1

SERVICES LTD
AND

VODAFONE INDIA LTD TRANSFEROR COMPANY 2

AND

IDEA CELLULAR LTD TRANSFEREE COMPANY

AND

THEIR RESPECTIVE CREDITORS AND SHAREHOLDERS

UNDER SECTION 230-232 OF THE COMPANIES ACT 2013 AND

OTHER PROVISIONS OF THE COMPANIES ACT

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 SHARE CAPITAL OF THE COMPANIES UNDERGOING
AMALGAMATION

1.VODAFONE MOBILE SERVICES LTD –SHARE CAPITAL

2.VODAFONE INDIA LIMITED SHARE CAPITAL

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 3.IDEA CELLULAR LIMITED

LEGAL PROVISIONS IN THE SCHEME OF AMALGAMATION

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CURRENT HOLDING STRUCTURE OF IDEA CELLULAR LTD AND POST
MERGER STRUCTURE

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FINANCIAL INFORMATION OF VODAFONE INDIA LTD AND IDEA
CELLULAR LTD PRIOR TO MERGER

Financial Highlights
 Merger is expected to generate Rs. 140 billion annual synergy, including
opex synergies of Rs. 84 billion, equivalent to a net present value of
approximately Rs. 700 billion.
 The equity infusion of Rs. 67.5 billion at Idea and Rs. 86 billion at
Vodafone coupled with monetization of standalone towers of both
companies for an enterprise value of Rs. 78.5 billion, provides the
company a strong cash balance of over Rs. 193 billion post payout of Rs.
39 billion to the DoT
 Additionally, the Company has an option to monetise an 11.15% stake in
Indus, which would equate to a cash consideration of Rs. 51 billion
 As at 30 June 2018, net debt was INR 1092 billion.

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 DATE OF COMPLETION OF MERGER- 31ST AUGUST 2018
Vodafone Idea Limited – An Aditya Birla Group & Vodafone Group
partnership
 1. Becomes operational as India’s leading telecom service provider with a
subscriber base of over 408 million
 2.New Board of Directors comprising 12 Directors (including 6 Independent
Directors) constituted, with Mr. Kumar Mangalam Birla as the Chairman.
 3.The Board has appointed Mr. Balesh Sharma as the CEO.
 4.Pan India Revenue Market Share (AGR) of 32.2%3, and a #1 position in 9
circles.
 5.Growing broadband network (3G+4G) with over 340,000 broadband sites
covering 840 million Indians.
 6.Largest voice network with over 200,000 unique GSM sites4 to cover over
1.2 billion Indians (92% population coverage).
 7. Large spectrum portfolio of ~1850 MHz and an adequate number of
broadband carriers, to provide superior consumer experience across 2G, 3G and
4G platforms.
 8.Widest distribution reach with over 1.7 million retailers and ~15,000 branded
stores to service customers.
 9.Both Vodafone and Idea brands, which have strong consumer affinity across
metro, urban, rural and deep interior markets, will continue to operate.

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 FINANCIAL INFORMATION INCLUDING BALANCE SHEET OF
THE TRANSFEROR COMPANIES PRIOR TO AMALGAMATION

1.VODAFONE MOBILE SERVICES LTD

2. VODAFONE INDIA LTD

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 BALANCE SHEET OF IDEA CELLULAR LTD PRIOR TO MERGER
AS ON 31ST MARCH 2017

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CONTINUED BALANCE SHEET……

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 BALANCE SHEET OF VODAFONE IDEA LTD POST MERGER
AS ON 31ST MARCH 2019
(POST AMALGAMATION)

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CONTINUED….

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 CONCLUSION
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This project helped me learn various real life aspects on
amalgamation of companies. It was a great experience of insight into
annual reports of companies, understanding regarding valuation of
shares, various legal aspects taken into consideration while doing so.
This project also shows the advantages of amalgamation and also
points out various risks factors associated with me. Overall this
project has truly proved to be an experience gaining study which was
joyful and much fruitful.

REFERENCES

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Books Referred-
1.Manan Publications-sem5 –Financial Accounting-5
2.ICAI module-3 advance accounts

Websites Referred-
1.www.icai.org
2.www.ideacellular.com
3.www.vodafoneidea.com
4.www.economictimes.com

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